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Bosnian ice cream manufacturer Ledo and mineral water company Sarajevski Kiseljak are set to become the majority stakeholders in failed regional food and beverage retail company Agrokor’s holdings in Bosnia-Herzegovina.
After a meeting held on Wednesday in Sarajevo, Bosnia-Herzegovina’s Minister of Trade and Economy Mirko Šarović announced that, through a recapitalization process of Agrokor’s Konzum in Bosnia-Herzegovina by Agrokor headquarters in Croatia, the two Bosnian food manufacturers Ledo and Sarajevksi Kiseljak would own Konzum in the country.
Founded in 1976, Konzum owner Agrokor became a retail giant in the southeast European region, founding and purchasing several food and beverage companies in several countries, in particular in the last two decades. Agrokor also acquired Serbian ice cream manufacturer Frikom, Fonyodi in Hungary, and Sarajevski Kiseljak in Bosnia-Herzegovina, which will now de facto own Agrokor.
In 2013, Agrokor struck a deal to acquire Slovenia’s Mercator and was set to become one of the largest retail and distribution companies in Central and Eastern Europe. After the acquisition, the company was larger than Italian Parmalat, employing some 60,000 in Croatia, Slovenia, Serbia, Bosnia-Herzegovina and Hungary, accounting for 15% of Croatia’s total GDP, with reported revenue of over $7 billion by 2015. The company also supported a vast network of suppliers and manufacturers in the region, making many jobs dependent on the retail group’s performance.
Instead of becoming a European food and beverage industry leader, however, the company seemed to have spread itself too thin with the purchase of Mercator and the entire enterprise began to topple in 2016, spelling near-catastrophic consequences for national economies throughout the region.
By late 2016, Agrokor amassed over $6 million in debt, putting several regional economies, and Croatia’s in particular, on thin ice. The state stepped in soon, appointing an administrator, considering a bail out, and finally creating a form of bankruptcy protection for the groups’ entire retail system through the so-called Lex Agrokor, in which the state took control of the company. Serbia rejected implementation of the new law [en] in late August 2017, and Croatian legal experts have raised doubt regarding the constitutionality [en] of the special law.
Minister Šarovič and the state-appointed Commissioner for Agrokor-related matters Ante Ramljak met with Agrokor representatives in Sarajevo on September 13, in a session so far, to review the implementation of the recapitalization process. One of the Minister’s main concerns ahead of the meeting was whether the process would put Bosnian-Herzegovian brands in jeopardy. Representatives assured the Minister that the operations of the two companies would not be negatively affected after becoming majority owners of Konzum in Bosnia.
Feature image source credit: Joakim Westerlund [CC BY-SA 2.0], via Wikimedia Commons